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❇️ New Deals - 21 Dec 2023
A student transportation company, employee wellness program, and 3 other interesting finds.
Helen Guo
December 20, 2023
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Hello SMB Deal Hunters!
Heads up, this will be the last issue before we break for the holidays. I’ll be back in your inbox on January 2. In the meantime, you can find me adventuring through Southeast Asia and setting goals for 2024.
Thanks for all the great feedback from the deals I shared on Tuesday!
Looks like the medical billing company (with the insane 50% EBITDA margins) I featured was a big hit.
I’m excited to share 5 new deals worth checking out.
Today’s issue is sponsored by CalTier, the fund that's making commercial real estate easy for everyone.
1/ School Bus Transportation Company
📍 Location: Midwest
💰 Asking Price: $3,454,678
💼 EBITDA: $885,815
📊 Revenue: $3,011,220
📅 Established: 2009
💭 My 2 Cents: I learned a few months ago that school bus transportation is a business (in a highly fragmented market at that!). This is a bus transportation service for special needs students that serves local school districts, which are usually nice sticky customers that sign up for contracts. I like that there’s a team of 53 employees in place (but what does employee retention look like?) and that growth has primarily come from referrals and reputation, as this leaves room to market to school districts directly and bid for tenders that many school districts issue. You’ve gotta love a recession-resistant business like this from a retiring owner!
2/ Employee Wellness Program For Businesses
📍 Location: Colorado (Relocatable)
💰 Asking Price: N/A
💼 EBITDA: $599,856
📊 Revenue: $2,872,116
📅 Established: 1990
💭 My 2 Cents: The B2B massage services deal I shared recently was so popular that I was jazzed to find this similar gem. This is a worksite wellness business that allows businesses to offer everything from fitness programs to mental health support for their employees. The results of programs like these speak for themselves: they have led to a 72% decrease in employer healthcare costs and a 14-19% reduction in employee absenteeism. It’s not surprising to me that companies that prioritize the health and happiness of their employees excel in employee retention. For this particular business, I like that it’s been around for a while (30+ years), has a retiring owner, and has a full team (21 employees) in place. I also really like that they have 66 active contracts and a YoY client retention rate of 90%. However, you should definitely dig in to what types of clients they have (size, maturity, number of employees, industry).
3/ Marketing Agency
📍 Location: Texas (Relocatable)
💰 Asking Price: $2,000,000
💼 EBITDA: $1,002,081
📊 Revenue: $1,691,357
📅 Established: 2009
💭 My 2 Cents: This is a 14-year-old marketing agency that, like most marketing agencies, run on very strong margins, especially considering that 80% of their revenue comes from repeat business. They also come with a team of 7, a retiring owner, and, ironically, no existing marketing spend. Yep, that’s right: a marketing agency isn’t spending anything to market itself. That means there is an opportunity to grow through B2B cold outreach and paid ads. I do want to know more about what niche they serve (is it something that will lead to long-term relationships or just quick wins?), what percentage of clients are on a retainer vs project basis (retainer is better), and what client retention is like. If that all comes back clean, then this very well could end up being a steal at this under 2x SDE multiple.
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4/ Automotive Service Business
📍 Location: Texas (Relocatable)
💰 Asking Price: $13,900,000
💼 EBITDA: $1,800,000
📊 Revenue: $18,000,000
📅 Established: 2012
💭 My 2 Cents: This is an automotive service business with a retiring owner that provides services ranging from oil changes to brake repairs in 750 locations nationwide. This is actually a fast growing industry; the US Automotive Service Market is expected to reach $177.51B in 2023 and grow at a CAGR of 5.98% to reach $237.33B by 2028. And with the average vehicle age in the US rising for 5 straight years now, I don’t think this is slowing down anytime soon. The clients are primarily collision centers and auto shops, and it seems like the company has gotten very good at courting them, as they claim to have perfected the process for launching new locations. If that’s true, then you can (and should) take advantage of this system and double down on what’s already working. However, you’ll definitely want to understand their customer acquisition strategy (sales and marketing) and customer onboarding process, as well as what client retention looks like.
5/ Culinary Blog
📍 Location: Remote
💰 Asking Price: $3,895,006
💼 EBITDA: $1,374,720
📊 Revenue: $1,503,636
📅 Established: 2017
💭 My 2 Cents: I love blogs for the margins, and this culinary, food, and beverage blog is no exception, as it sports an insane 91% net profit margin. It pulls in 2 million monthly views, which is a strong number for organic traffic, and over 50% of those visitors are from North America (a valuable audience). This traffic opens up a world of growth opportunities. You could build a direct ad sales business, which is more lucrative than the display ads the site currently relies on. You could start owning the audience by growing an email newsletter (which is less dependent on Google’s algorithm and opens up more ad space). I’d consider launching a digital product like a recipe book or recipe subscription (similar to NY Times Cooking). I’d also establish affiliate partnerships with targeted companies (i.e. Butcher Box), which can be very profitable when done correctly.
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If you’ve read this far, I just want to take a moment and say thank you for your support throughout this year. It's hard to believe that when I started SMB Deal Hunter in April and sent out my first issue to 148 readers, just eight months later, I'd be pressing that same send button for over 23,000 of you.
Happy holidays and see you in 2024!
-Helen Guo
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P.S. Whenever you’re ready, here are a few ways for us to work together:
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This publication is a newsletter only and the information provided herein is the opinion of our editors and writers only. Any transaction or opportunity of any kind is provided for information only; SMB Deal Hunter does not verify nor confirm information. SMB Deal Hunter is not making any offer to readers to participate in any transaction or opportunity described herein.
*AN OFFERING STATEMENT REGARDING THIS OFFERING HAS BEEN FILED WITH THE SEC. THE SEC HAS QUALIFIED THAT OFFERING STATEMENT, WHICH ONLY MEANS THAT THE COMPANY MAY MAKE SALES OF THE SECURITIES DESCRIBED BY THE OFFERING STATEMENT. IT DOES NOT MEAN THAT THE SEC HAS APPROVED, PASSED UPON THE MERITS OR PASSED UPON THE ACCURACY OR COMPLETENESS OF THE INFORMATION IN THE OFFERING STATEMENT. YOU MAY OBTAIN A COPY OF THE OFFERING CIRCULAR THAT IS PART OF THAT OFFERING STATEMENT FROM: Offering Circular